중앙데일리

Experts: Asian nations should take united stand

It’s best if Korea, Japan and China present coordinated plan at summit

Nov 11,2008

Korea, China and Japan should arrive at the upcoming G-20 summit with “a coordinated Asian macroeconomic policy framework already in hand,” an international panel of experts has recommended.

The Asian Economic Panel said in a letter to G-20 members yesterday that the framework can include provision of large currency swap lines among the three countries’ central banks, joint fiscal expansion such as investments in social infrastructure and joint monetary expansion such as another round of coordinated interest rate cuts.

The AEP, founded in 2001, has economists from around the world as members, including professors Jeffrey D. Sachs of Columbia University, Naoyuki Yoshino of Keio University, and Park Yung-chul of Korea University.

The panel warned that the United States would likely experience “a dramatic downturn,” with severe spillover to other parts of the world. “That spillover can include: falling exports from Asia to the U.S., a weaker dollar, and a withdrawal of credit lines from U.S. banks and U.S. investors in Asia,” the academy said.

Accordingly, China, Japan and Korea should take “urgent and coordinated actions,” the academy said. Their macroeconomic expansion will also help moderate the global slowdown, it said, because higher growth in Asia will boost sales of U.S. and European goods there.

The AEP said China, Japan, and Korea need to announce that they will work closely together to ensure that Asian growth remains robust. Members also said the three countries should set up currency swap lines between their central banks and should “remove any kind of IMF [International Monetary Fund] involvement from the operations of these swap lines.”

The IMF sees issues from the viewpoints of the U.S. and Europe, so the organization’s view could conflict with the realities of Asian economies, according to the panel.

The experts also recommended the announcement of a joint fiscal expansion and a joint monetary expansion.

And the AEF said the three countries should announce that they will “abjure from beggar-thy-neighbor exchange rate adjustments.”

“If the three countries compete to stabilize only their own currency value, it will eventually damage all of them,” Park said.

The panel’s final recommendation was that the three countries should establish a committee of senior finance ministry and central bank officials to set a coordinated package of counter-cyclical measures.